Notes

MEDIA OWNERSHIP

Since the mid-20th century, there has been substantial international support in Western democracies for plurality of media ownership. Public policy and laws designed to place structural limits on the number of media outlets owned or controlled by one proprietor have been regarded as a precondition for achieving a diverse range of viewpoints in democratic nations. The assumption has been that concentrated ownership confers undemocratic power on ‘influential’ owners to sway governments, and advance their own private interests. So, while the power of the major media groups in this key area of public policy has long been recognised—particularly during election periods—ruling political parties increasingly only make significant policy changes with an eye to how they may impact on their media allies. Consistent with other Western nations, there was an overall trend to deregulation in media markets from the 1980s. The combined result has been a steady concentration of media ownership in Australia.

Australian politicians have tended to use the term ‘diversity’ to justify rules to curb dominance by particular media owners. The debate has been between those who would like to see further liberalisation to allow for freer local and foreign investment and those who argue for continuing ownership restrictions. The argument has been that concentration within the sector will result in a further reduction in diversity of viewpoints and opinions, to the detriment of democratic processes. There was also a prevailing view that, with the rise of broadcast media, the airwaves should be protected by parliament.

The first serious concerns about the concentration of media ownership in Australia emerged in 1935, when the powerful Amalgamated Wireless (Australasia) Ltd (AWA) entered into negotiations to lease 2CH Sydney as a hub for relays to its country stations. This led to a parliamentary and public debate centred on the allegation that two corporations—the AWA and the Herald and Weekly Times (HWT)— controlled some 24 commercial radio stations. Regulations were introduced, providing for a maximum of eight radio stations to be owned by one company.

Restrictions on the foreign ownership of radio in 1951 were informed by a parliamentary resolution that it was ‘undesirable that any person not an Australian should have any substantial measure of ownership or control, over any Australian commercial broadcasting station, whether such ownership or control be exercisable directly or indirectly’. Prime Minister (Sir) Robert Menzies argued that the policy was directed at non-Australians who wished to secure a ‘substantial control over some form of internal propaganda in Australia’. This gave way to specific percentage limits in television and radio, aimed at capping total individual foreign ownership at 20 per cent of the shares of a television company.

In subsequent decades, the words ‘in a position to exercise control’ of a media company would become the contested mantra of successive governments. It was widely recognised that the foreign ownership rules did not achieve their intent, and governments had wanted a flexible outcome that allowed substantial control in some cases. Network Ten was an example: Canadian media corporation Canwest used creative debt financing instruments to control the company from 1992 to 2009, and work around the foreign ownership restrictions.

At their heart, anxieties over foreign ownership were about ‘internal propaganda’ or ‘directed coverage’ and sovereignty. The accepted preference for local ownership was a matter of perceived accountability. A combined practice has emerged of the Foreign Investment Review Board picking ‘acceptable foreign owners’, together with statutory percentage and numerical limits for both foreigners and local owners, in the hope that no single owner’s megaphone would become too loud.

But a series of ownership consolidation deals throughout the 20th century has seen Australia’s print media concentration steadily increase to one of the highest levels among Western democracies. Three owners—News Corp Australia, Fairfax Media and APN News and Media— hold approximately 98 per cent of the sector, and News and Fairfax together hold about 88 per cent of the print media assets in the country. Internationally, this is very high: the United States, with a population of around 307 million, has three corporations controlling 26 per cent of the circulation of newspapers. The United Kingdom, with a population of 62 million, has three corporations with 62 per cent of the circulation. News alone owns and controls approximately 65 per cent of the circulation of Australia’s capital city and daily newspaper titles.

This concentration of print media ownership in Australia can easily be seen in the steady reduction in the number of titles and owners over the past century. In Australia in 1903, there were 21 daily newspapers and 17 owners in the capital cities. By the mid-20th century, there had been a gradual fall to 15 dailies and 10 owners. In 2013, there were 10 metropolitan dailies and three owners (Fairfax Media, News Corp Australia and West Australian Newspapers).

In 2014, News Corp Australia (formerly News Limited), a wholly owned subsidiary of Rupert Murdoch’s News Corp, and Fairfax Media control the metropolitan print markets, and much of the rural and regional press in New South Wales, Victoria, South Australia, Tasmania and the Northern Territory. They have diversified on to the web with all of their city, suburban and rural titles, grouped as News Digital Media, with more than 140 generalist online news titles, and Fairfax Digital, with over 180 titles including five state farming news sites and four talk radio websites.

These two major interests operate alongside lesser regional publishers, APN News and Media and West Australian Newspapers, which operate in southern Queensland and northern New South Wales, and Western Australia, respectively. During the 20th century, these companies expanded through takeovers and mergers, and due to cross-media restrictions that encouraged intra-sector growth.

The impact of Australian media’s specific sectoral configuration has played a role too: a BBC-type public sector broadcaster in the ABC and the multicultural SBS have been a diversifying counterbalance to the commercial media.

One proprietor who shone brightly in the early years of the newspaper industry was Sir Keith Murdoch. At 30, Murdoch was a powerful editor in Australia who moved in influential media and political circles in London, and later established an Australian base at the Adelaide Advertiser to launch a global media dynasty.

The HWT grew from a 19th century newspaper into a top-ranking media corporation. Although Keith Murdoch had financial interests in the HWT, death duties disposed of much of that investment. The Adelaide Advertiser was his only major asset when he died in 1952, and this was to become the base for an empire controlled by his son, Rupert, that spanned Australia, Britain, the United States and New Zealand. The Murdoch family-controlled News Corp became the dominant player in the Australian media.

The other dominant dynasty in newspapers throughout this period has been the Fairfax group. It originally published the Sydney Morning Herald, but then added the Sunday Herald (merged with Associated Newspapers Ltd’s Sunday Sun to become the Sun-Herald), the Australian Financial Review and the National Times. Later, with the full buyout of David Syme and Co. Ltd, the Fairfax group acquired the Age in Melbourne and was able to establish a powerful Sydney–Melbourne media stable. After more than a century, the Fairfax family’s equity interests have gradually been diluted through a broad range of institutional investors in the publicly listed corporation.

From the 1930s, along with News Corporation, the Packer family’s Australian Consolidated Press was also significant; this changed in 2012, when it sold its remaining print media assets to focus on casino businesses. Sir Frank Packer, who built the media empire, ruled his fiefdom with an iron fist—a family trait transmitted to his son and successor Kerry, whose reign lasted until his death in 2005. Kerry’s explosive appearance before a House of Representatives Select Committee inquiry into the print media in 1991, centred on his attempt to gain control of John Fairfax Holdings, is the stuff of legend.

Since the first television licences were issued in Australia in the second half of the 1950s, concerns about ownership and control have been controversial, and led to continuous amendments to the laws governing these licences. The Royal Commission on Television of 1953–54 recommended that, as in radio, the relevant minister (the Postmaster-General) would be responsible for allocating licences.

At the outset of television, full foreign ownership or interests connected with political parties were rejected. Local ownership, newspaper ownership and the concentration of control were the key concerns in the ‘Brisbane and Adelaide Affair’ of 1958. The licence-allocation process was overseen by the Australian Broadcasting Control Board (ABCB), which recommended that licences not be awarded to existing newspaper and television interests in Sydney and Melbourne. The Menzies Coalition government rejected that recommendation and insisted the ABCB recommend two licences for each of Brisbane and Adelaide from the existing applicants.

In the 1960s, there were unsuccessful attempts to introduce laws that would regulate share transactions and other ways of controlling television companies. Takeovers in Sydney (TEN10) and Wollongong (WIN4) in the late 1970s led to a string of further takeovers in commercial television. They established the structure of three major commercial networks that persisted for several decades, when the rise of internet media began to undermine television’s audiences and revenue base.

From the late 1970s, the ABCB’s successor, the Australian Broadcasting Tribunal (ABT), oversaw a licence-renewal process of public hearings in which the public was permitted to participate. But the ABT then reduced the frequency and scope of inquiries, partly in response to changes in the law.

One of the better-known moments of high drama in media ownership occurred in 1981, with the passage of legislation that effectively gave a green light to Murdoch family interests to acquire controlling interests in Ten Network stations in Melbourne and Sydney while maintaining existing newspaper assets. This followed News Limited’s purchase of 50 per cent of Ansett Transport Industries, which held interests in television licences, including ATV10 in Melbourne. The acquisition was in breach of the Broadcasting and Television Act 1974 and the ABT refused approval in September 1980 (initially it did not even consider it, but its hand was forced by the High Court). The ABT rejected News Limited’s application on the grounds that owning stations in Sydney and Melbourne would be against the public interest. However, the decision was short lived because News Limited appealed to the Administrative Appeals Tribunal and had the decision overturned.

Separately, but in tacit accord with that decision, new legislation ushered through by a Fraser Coalition government-controlled Senate removed the prior approval requirement for the ABT in takeover situations. Concentration of ownership was no longer to be taken into account in considering share transactions such as the ATV10 control issue. Foreign ownership was also redefined around a test based on ‘citizenship’ rather than ‘residency’. Rupert Murdoch, now a US resident, was to benefit from this change as well, and these amendments came to be known as ‘the Murdoch amendments’.

The limit on television station ownership to two stations per licence owner that had been in place since the introduction of television in 1956 came under increasing pressure in the 1980s. In the context of the introduction of the television ‘equalisation’ (also known as aggregation) scheme in 1986–87, to introduce additional licences to single-station markets, there were moves to change the limit to one based on a maximum percentage of the Australia population. This question had not been resolved by the time the introduction of the ‘equalisation’ scheme was announced in May 1986. This maximum percentage of the Australian population ‘reached’ eventually settled on 75 per cent, but this anti-concentration rule was over time slowly rendered redundant by the internet, and no updated version had been formulated by 2014. This became a featured element in debates about media reform Bills introduced by the Gillard Labor government in March 2013.

In addition to concentration in the press, and an oligopoly of television ownership operatingat a national level, there has been regional television concentration controlled by Bruce Gordon’s WIN Corporation (acquired from Murdoch’s News Limited in 1979), and Paul Ramsay’s asset-diversified Prime Media. The place of regional television groups is tending to be increasingly under the gaze of general competition law administered by the Australian Competition and Consumer Commission, and the challenges of defining particular media markets in a converging landscape a recurring theme. The capacity of competition law to deal with media pluralism is often rightly questioned, when overshadowed by concerns about ‘substantial lessening of competition’ and contested definitions of media markets.

Undoubtedly the most controversial and popularly recognised ownership rules are the so-called ‘cross-media rules’ introduced by the Hawke Labor government in 1986–87. The rules were designed to limit cross-ownership between television, radio and newspapers. Indeed, the implementation of these rules is regarded as a key element of the government’s legacy. In Treasurer Paul Keating’s famous words, media proprietors could be ‘princes of print or queens of the screen’, but not both.

In what he described as ‘the biggest newspaper takeover in the world’, in 1987 Rupert Murdoch succeeded in his second bid for the HWT. Through the takeover, he added to his holdings six metropolitan dailies, a number of magazines, and several regional and suburban newspapers. Somewhat controversially, the Trade Practices Commission did not view the takeover as creating ‘market dominance’.

Elements of the Broadcasting (Ownership and Control) Act 1987 were carried over to the Broadcasting Services Act 1992, which made it unlawful for an individual or companies ‘in a position to exercise control’ of commercial television or commercial radio licence to also control a newspaper in the same licence area. To determine this overlap, the media regulator (since 2005, the Australian Media and Communications Authority) is required to keep an ‘associated newspaper register’ to monitor whether more that 50 per cent of the circulation of the newspaper is within the licence area of the relevant commercial broadcasting licence. This law has had an important diversity-maintaining impact on the structure of Australian media. Legislators formed the view that it was sound public policy to prevent media concentration across these key media platforms. Critics have always decried their shortcoming of not including other popular media sectors such as magazines, free-to-air television or pay television and, from the late 1990s, online news media sites.

Prior to introduction of the 1987 cross-media laws, limits were placed on the numbers of media-specific outlets within a single sector. However, groups such as John Fairfax Holdings and the HWT had been able to accumulate media across these platforms, and it was considered not to be in the public interest to allow this kind of concentration of influence.

Successive Coalition governments led by Prime Minister John Howard from 1996 attempted to reduce the impact of laws about media concentration, but it took until 2006 for this goal to finally be achieved. The Broadcasting Services Amendment (Media Ownership) Act 2006 took effect from April 2007. Foreign ownership and control rules were repealed by the same legislation.

In essence, the new laws removed the main cross-media ownership restrictions, now allowing television/newspaper/radio mergers with a ‘two out of three’ media sector limit, and introducing metropolitan and rural/regional voice limits under the so-called ‘five/four’ voices test. The new media ownership laws equated ‘voices’ with ‘media groups’—or a group of two or more traditional media operations (a commercial radio broadcasting licence, and associated newspaper or a commercial television broadcasting licence, in any combination). The conditions for breaches of these licences are said to occur when an ‘unacceptable media diversity situation’ arises from a merger.

The newly liberalised rules resulted in some dramatic changes to the Australian media landscape. First, lifting of the foreign ownership rules allowed for two commercial television networks, Seven and Nine, to sell 50 per cent of their media assets into US private equity arrangements (first Nine with CVC Asia Pacific and then Seven with Kravis Kohlberg Roberts), using these sales to reposition themselves with expansion into other media and non-media assets. The Packer family-controlled media interests (via ACP) gradually sold down their remaining 50 per cent stake to CVC Asia Pacific. In 2012, they also sold their highly profitable 25 per cent of Foxtel to News Corporation, and their magazine interests to Germany’s Bauer Media Group. The once-powerful Packer dynasty thus exited from the media sector almost entirely, except for a 10 per cent stake in Network Ten.

Seven West Media has also undertaken financial reengineering of its private equity arrangements with Kravis Kohlberg Roberts, which now holds about 45 per cent of the Seven Media Group. There are mixed opinions about the merits or otherwise of this foreign private equity-led restructuring, which saw much of the ownership of Australian commercial television networks move offshore into the hands of private institutional investors. The passage of laws allowing for commercial television to receive very generous licence fee rebates suggests the sector is struggling to survive on its own. This may point to an argument that the US private equity arrangements have been of temporary benefit at best, and at worst paved the way for yet further dominance of US television products and even weaker Australian content rules.

The newspaper sector also saw concentration of newspaper ownership. The Seven Network bought 14.9 per cent of West Australian Newspapers (WAN) but then continued to over 20 per cent, and easy control of the company. In the Perth market, at the time of the buy-up by Kerry Stokes’ Seven, it meant that the highest rating television network had control of the highest circulation daily newspaper and the second most popular online news site associated with the paper (TheWest.com.au).

At the same time, Fairfax Media took the opportunity to consolidate on buoyant share prices to make a pre-emptive defensive move, and initiate a merger with Rural Press Limited. This merger created a group valued at around $9 billion (including $2.3 billion in debt). At the time of the merger, the group held more than 240 regional, rural and suburban publications, nine radio stations and the leading New Zealand internet site TradeMe (which it subsequently sold to pay down a large debt burden), as well as 20 agricultural titles in the United States.

Consolidation in the radio sector saw the Macquarie Media Group (MMG) taking a 14.9 per cent ($170 million) stake in Southern Cross Broadcasting, a major networked radio operation. Fairfax Media also acquired Southern Cross Broadcasting’s metropolitan radio stations in a three-way deal between itself, Southern Cross Broadcasting and MMG for $520 million in November 2007.

While the cross-media changes were underway, Labor’s shadow Minister for Communications, Senator Stephen Conroy, attacked the Howard government for its proposed changes to ownership laws. The legislation passed, and Australia renewed its dubious distinction of having the most concentrated print media among comparable Western democracies. The Howard government’s legacy to media ownership laws was to dilute cross-media restrictions and to remove foreign ownership limits, with no discernible benefit to Australian audiences.

A 2000 report published by the Productivity Commission recommended a program of ongoing deregulation of Australia’s commercial media system. However, it argued that before such liberalisation of the ownership rules could proceed, a number of events should occur, including: the removal of existing foreign ownership restrictions: the introduction of additional spectrum for new entrants; and the introduction of a media-specific public-interest test to govern takeovers. These objectives were in part met by the 2007 reforms, but the public-interest test was omitted. It was raised again by the 2012 Convergence Review and Ray Finkelstein’s Independent Inquiry into the Media and Media Regulation recommendations, and in the Labor government’s response calling for the establishment of a Public Interest Media Advocate.

The Australian media landscape has had virtually the same local players since the 1990s, along with increasing levels of ownership concentration. However, in an era of convergent media, the former monopoly telecommunications giant Telstra (and its antecedent companies) are now powerful multimedia enterprises. The dominant traditional media corporations have to some extent been re-engineered, and are in decline.

In the transition to a media landscape dominated by broadband internet distribution and the growth of US-centric new media behemoths like Google, Facebook, Apple, Amazon and eBay, the continuing longer-term involvement of Australia’s traditional media owners seems remote.